Lennox Cuts 2026 Profit Outlook To $21.00-$21.50 A Share As Price Cuts Hit Home Comfort Margins
Home Comfort segment margin fell 490 basis points while commercial HVAC revenue jumped 24%, the company said.
Lennox, the heating and cooling maker, lowered its 2026 adjusted earnings forecast to $21.00 to $21.50 per share from $23.00 to $24.00 on Wednesday, after price cuts meant to defend market share and tariff costs squeezed its residential business. Third-quarter revenue still rose 10% to $1.6 billion, but adjusted earnings fell 7% to $6.84 per share.
Residential margins take the hit
Home Comfort Solutions, which makes furnaces, air conditioners and heat pumps for homes, saw revenue rise 3% to $937 million. Segment profit dropped 18% to $176 million, and margin fell 490 basis points to 18.7%.
The company said targeted price adjustments in select market segments were meant to defend and recapture share, and that those moves, together with inflation and tariff-related costs, weighed on profit. Lower sales volumes cost $12 million of profit, while product cost inflation, including tariffs, and lower factory absorption cost $32 million.
CEO Alok Maskara said results "fell short of our expectations, reflecting heightened competitive pressure and the impact of persistent inflation on our costs." He said Lennox is retooling its processes to pass through cost increases more effectively while accelerating productivity.
Commercial strength offsets only part
Building Climate Solutions, which sells rooftop units and commercial refrigeration, grew revenue 24% to $635 million, including 15% organic growth. Segment profit rose 19% to $167 million, with margin at 26.2%, down 110 basis points from a record in the prior-year quarter. Lennox still expects full-year margins in the segment to expand.
Company-wide, total segment profit fell 2% to $323 million and margin declined 240 basis points to 20.6%. A $45 million headwind from product cost inflation, including tariffs, and lower factory absorption was joined by $15 million of higher fuel costs and broader inflation. Offsets were $13 million from volume, $21 million from mix and price, and $20 million from acquisitions.
Standard-accounting earnings were $6.41 per share, against $7.38 a year earlier.
Cash, buybacks and guidance
Operating cash flow rose to $395 million from $301 million, driven by reduced inventory levels, and the company repurchased $151 million of stock in the quarter. Lennox also set free cash flow guidance at $700 million to $750 million and revenue growth of about 6% for the year, including a 5% benefit from completed acquisitions.
For Home Comfort, management's priorities include mitigating share challenges, advancing tariff mitigation and productivity efforts, and introducing new entry-tier products.
Management discussed the results on a call at 8:30 a.m. Central Time Wednesday, with a replay available until November 4.
Sources
- 8-K Filing — LENNOX INTERNATIONAL INC (LII) — SEC EDGAR
- Exhibit lii-20260930xexx991pressre.htm — LENNOX INTERNATIONAL INC 8-K exhibit — SEC EDGAR
- Lennox Reports 2026 Third Quarter Earnings Results — prnewswire.com
